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Loans
 3 Months Ended
Mar. 31, 2022
Receivables [Abstract]  
Loans

3.

Loans

The Bank’s lending activities are primarily conducted in and around Dover, New Hampshire and in the areas surrounding its branches. The Bank grants commercial real estate loans, multifamily 5+ dwelling unit loans, commercial and industrial loans, acquisition, development and land loans, one- to four-family residential loans, home equity loans and lines of credit and consumer loans. Most loans originated by the bank are collateralized by real estate. The ability and willingness of real estate, commercial and construction loan borrowers to honor their repayment commitments is generally dependent on the health of the real estate sector in the borrowers’ geographic area and the general economy.

In response to the COVID-19 pandemic, the Small Business Administration (“SBA”) established the Paycheck Protection Program (“PPP”), which was designed to aid small- and medium-sized businesses through federally guaranteed SBA loans (“PPP loans”) distributed through banks. PPP loans are fully guaranteed as to principal and interest by the SBA. During the year ended December 31, 2021, the Bank originated 134 PPP loans with aggregate outstanding principal balances of $13.1 million. As of March 31, 2022 and December 31, 2021, total PPP loan principal balances were $3.2 million and $5.5 million, respectively, and are included in commercial and industrial loans (C+I).

Loans consisted of the following at March 31, 2022 and December 31, 2021:

 

 

 

March 31,

2022

 

 

December 31,

2021

 

 

 

(Dollars in thousands)

 

Commercial real estate (CRE)

 

$

76,397

 

 

$

72,057

 

Multifamily (MF)

 

 

8,900

 

 

 

8,998

 

Commercial and industrial (C+I)

 

 

28,459

 

 

 

26,851

 

Acquisition, development, and land (ADL)

 

 

17,423

 

 

 

21,365

 

1-4 family residential (RES)

 

 

235,273

 

 

 

234,199

 

Home equity loans and lines of credit (HELOC)

 

 

6,569

 

 

 

6,947

 

Consumer (CON)

 

 

4,988

 

 

 

4,574

 

Total loans

 

 

378,009

 

 

 

374,991

 

Net deferred loan costs

 

 

1,814

 

 

 

1,650

 

Allowance for loan losses

 

 

(3,642

)

 

 

(3,590

)

Net loans

 

$

376,181

 

 

$

373,051

 

 

 

Transactions in the allowance for loan losses (“ALL”) for the three months ended March 31, 2022 and 2021 by portfolio segment are summarized as follows:

 

(Dollars in thousands)

 

CRE

 

 

MF

 

 

C+I

 

 

ADL

 

 

RES

 

 

HELOC

 

 

CON

 

 

Unallocated

 

 

Total

 

Balance, December 31, 2021

 

$

833

 

 

$

80

 

 

$

194

 

 

$

178

 

 

$

2,139

 

 

$

63

 

 

$

75

 

 

$

28

 

 

$

3,590

 

Provision for loan losses

 

 

61

 

 

 

(2

)

 

 

24

 

 

 

(62

)

 

 

49

 

 

 

(1

)

 

 

19

 

 

 

(28

)

 

 

60

 

Charge-offs

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(9

)

 

 

—

 

 

 

(9

)

Recoveries

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1

 

 

 

—

 

 

 

1

 

Balance, March 31, 2022

 

$

894

 

 

$

78

 

 

$

218

 

 

$

116

 

 

$

2,188

 

 

$

62

 

 

$

86

 

 

$

—

 

 

$

3,642

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2020

 

$

753

 

 

$

60

 

 

$

267

 

 

$

174

 

 

$

1,656

 

 

$

78

 

 

$

52

 

 

$

302

 

 

$

3,342

 

Provision for loan losses

 

 

160

 

 

 

(21

)

 

 

(62

)

 

 

122

 

 

 

(97

)

 

 

(11

)

 

 

(3

)

 

 

(28

)

 

 

60

 

Charge-offs

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Recoveries

 

 

—

 

 

 

—

 

 

 

1

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1

 

 

 

—

 

 

 

2

 

Balance, March 31, 2021

 

$

913

 

 

$

39

 

 

$

206

 

 

$

296

 

 

$

1,559

 

 

$

67

 

 

$

50

 

 

$

274

 

 

$

3,404

 

 

As of March 31, 2022 and December 31, 2021, information about loans and the ALL by portfolio segment are summarized as follows:

 

(Dollars in thousands)

 

CRE

 

 

MF

 

 

C+I

 

 

ADL

 

 

RES

 

 

HELOC

 

 

CON

 

 

Unallocated

 

 

Total

 

March 31, 2022 Loan Balances

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for impairment

 

$

101

 

 

$

—

 

 

$

25

 

 

$

—

 

 

$

680

 

 

$

115

 

 

$

—

 

 

$

—

 

 

$

921

 

Collectively evaluated for impairment

 

 

76,296

 

 

 

8,900

 

 

 

28,434

 

 

 

17,423

 

 

 

234,593

 

 

 

6,454

 

 

 

4,988

 

 

 

—

 

 

 

377,088

 

Total

 

$

76,397

 

 

$

8,900

 

 

$

28,459

 

 

$

17,423

 

 

$

235,273

 

 

$

6,569

 

 

$

4,988

 

 

$

—

 

 

$

378,009

 

ALL related to the loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for impairment

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

Collectively evaluated for impairment

 

 

894

 

 

 

78

 

 

 

218

 

 

 

116

 

 

 

2,188

 

 

 

62

 

 

 

86

 

 

 

—

 

 

 

3,642

 

Total

 

$

894

 

 

$

78

 

 

$

218

 

 

$

116

 

 

$

2,188

 

 

$

62

 

 

$

86

 

 

$

—

 

 

$

3,642

 

December 31, 2021 Loan Balances

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for impairment

 

$

104

 

 

$

—

 

 

$

28

 

 

$

—

 

 

$

722

 

 

$

115

 

 

$

—

 

 

$

—

 

 

$

969

 

Collectively evaluated for impairment

 

 

71,953

 

 

 

8,998

 

 

 

26,823

 

 

 

21,365

 

 

 

233,477

 

 

 

6,832

 

 

 

4,574

 

 

 

—

 

 

 

374,022

 

Total

 

$

72,057

 

 

$

8,998

 

 

$

26,851

 

 

$

21,365

 

 

$

234,199

 

 

$

6,947

 

 

$

4,574

 

 

$

—

 

 

$

374,991

 

ALL related to the loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for impairment

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

Collectively evaluated for impairment

 

 

833

 

 

 

80

 

 

 

194

 

 

 

178

 

 

 

2,139

 

 

 

63

 

 

 

75

 

 

 

28

 

 

 

3,590

 

Total

 

$

833

 

 

$

80

 

 

$

194

 

 

$

178

 

 

$

2,139

 

 

$

63

 

 

$

75

 

 

$

28

 

 

$

3,590

 

 

The following is an aged analysis of past due loans by portfolio segment as of March 31, 2022: 

 

(Dollars in thousands)

 

30-59 Days

 

 

60-89 Days

 

 

90 + Days

 

 

Total Past Due

 

 

Current

 

 

Total Loans

 

 

Non-Accrual

Loans

 

CRE

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

76,397

 

 

$

76,397

 

 

$

—

 

MF

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

8,900

 

 

 

8,900

 

 

 

—

 

C+I

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

28,459

 

 

 

28,459

 

 

 

—

 

ADL

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

17,423

 

 

 

17,423

 

 

 

—

 

RES

 

 

—

 

 

 

—

 

 

 

487

 

 

 

487

 

 

 

234,786

 

 

 

235,273

 

 

 

680

 

HELOC

 

 

122

 

 

 

16

 

 

 

115

 

 

 

253

 

 

 

6,316

 

 

 

6,569

 

 

 

115

 

CON

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

4,988

 

 

 

4,988

 

 

 

—

 

 

 

$

122

 

 

$

16

 

 

$

602

 

 

$

740

 

 

$

377,269

 

 

$

378,009

 

 

$

795

 

 

 

The following is an aged analysis of past due loans by portfolio segment as of December 31, 2021:

 

(Dollars in thousands)

 

30-59 Days

 

 

60-89 Days

 

 

90 + Days

 

 

Total Past Due

 

 

Current

 

 

Total Loans

 

 

Non-Accrual

Loans

 

CRE

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

72,057

 

 

$

72,057

 

 

$

—

 

MF

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

8,998

 

 

 

8,998

 

 

 

—

 

C+I

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

26,851

 

 

 

26,851

 

 

 

—

 

ADL

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

21,365

 

 

 

21,365

 

 

 

—

 

RES

 

 

—

 

 

 

487

 

 

 

235

 

 

 

722

 

 

 

233,477

 

 

 

234,199

 

 

 

722

 

HELOC

 

 

117

 

 

 

129

 

 

 

—

 

 

 

246

 

 

 

6,701

 

 

 

6,947

 

 

 

115

 

CON

 

 

6

 

 

 

—

 

 

 

—

 

 

 

6

 

 

 

4,568

 

 

 

4,574

 

 

 

—

 

 

 

$

123

 

 

$

616

 

 

$

235

 

 

$

974

 

 

$

374,017

 

 

$

374,991

 

 

$

837

 

 

There were no loans collateralized by residential real estate property in the process of foreclosure at March 31, 2022 or December 31, 2021.

The following table provides information on impaired loans:

 

 

As of March 31, 2022

 

 

At March 31, 2022

 

(Dollars in thousands)

 

Recorded

Investment

 

 

Unpaid

Principal

Balance

 

 

Related

Allowance

 

 

Average

Recorded

Investment

 

 

Interest

Income

Recognized

 

With no related allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CRE

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

MF

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

C+I

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

ADL

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

RES

 

 

680

 

 

 

680

 

 

 

—

 

 

 

701

 

 

 

1

 

HELOC

 

 

115

 

 

 

115

 

 

 

—

 

 

 

115

 

 

 

—

 

CON

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Total impaired loans

 

$

795

 

 

$

795

 

 

$

—

 

 

$

816

 

 

$

1

 

.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2021

 

 

At March 31, 2021

 

With no related allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CRE

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

MF

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

C+I

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

ADL

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

RES

 

 

722

 

 

 

722

 

 

 

—

 

 

 

62

 

 

 

—

 

HELOC

 

 

115

 

 

 

115

 

 

 

—

 

 

 

—

 

 

 

—

 

CON

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Total impaired loans

 

$

837

 

 

$

837

 

 

$

—

 

 

$

62

 

 

$

—

 

 

During 2021, one loan was determined to be a troubled debt restructuring (“TDR”). At December 31, 2021, this loan had a balance of $195,000 which was determined through a calculation of the present value of estimated future cashflows. At March 31, 2022, the balance of this TDR was approximately $194,000. The modification agreement defers delinquent interest and escrow payments to the end of the loan. The allowance for loan losses included a specific reserve for this TDR of $-0- at March 31, 2022 and December 31, 2021. At March 31, 2021, there were no loans modified as TDRs.

Credit Quality Information

The Bank utilizes a ten-grade internal loan rating system for its commercial real estate, multifamily, commercial and industrial and acquisition, development and land loans. Residential real estate, home equity line of credit and consumer loans are considered “pass” rated loans until they become delinquent. Once delinquent, loans can be rated an 8, 9 or 10 as applicable.

Loans rated 1 through 6: Loans in these categories are considered “pass” rated loans with low to average risk.

Loans rated 7: Loans in this category are considered “special mention.” These loans are starting to show signs of potential weakness and are being closely monitored by management.

Loans rated 8: Loans in this category are considered “substandard.” Generally, a loan is considered substandard if it is inadequately protected by the current net worth and paying capacity of the obligors and/or the collateral pledged. There is a distinct possibility that the Bank will sustain some loss if the weakness is not corrected. These loans are individually evaluated for impairment on a quarterly basis, or more often if needed.

Loans rated 9: Loans in this category are considered “doubtful.” Loans classified as doubtful have all the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, highly questionable and improbable.

Loans rated 10: Loans in this category are considered uncollectible (“loss”) and of such little value that their continuance as loans is not warranted and should be charged off.

On an annual basis, or more often if needed, the Bank formally reviews the ratings on its commercial and industrial, commercial real estate and multifamily loans. On a periodic basis, the Bank engages an independent third party to review a significant portion of loans within these segments and to assess the credit risk management practices of its commercial lending department. Management uses the results of these reviews as part of its annual review process and overall credit risk administration.

On a quarterly basis, the Bank formally reviews the ratings on its applicable residential real estate and home equity loans if they have become classified as non-accrual. Criteria used to determine ratings consist of loan-to-value ratios and days delinquent.

The following presents the internal risk rating of loans by portfolio segment as of March 31, 2022:

 

(Dollars in thousands)

 

Pass

 

 

Special

Mention

 

 

Substandard

 

 

Total

 

CRE

 

$

73,619

 

 

$

2,677

 

 

$

101

 

 

$

76,397

 

MF

 

 

8,900

 

 

 

—

 

 

 

—

 

 

 

8,900

 

C+I

 

 

28,434

 

 

 

—

 

 

 

25

 

 

 

28,459

 

ADL

 

 

17,423

 

 

 

—

 

 

 

—

 

 

 

17,423

 

RES

 

 

234,593

 

 

 

—

 

 

 

680

 

 

 

235,273

 

HELOC

 

 

6,454

 

 

 

—

 

 

 

115

 

 

 

6,569

 

CON

 

 

4,988

 

 

 

—

 

 

 

—

 

 

 

4,988

 

Total

 

$

374,411

 

 

$

2,677

 

 

$

921

 

 

$

378,009

 

 

The following presents the internal risk rating of loans by portfolio segment as of December 31, 2021:

 

(Dollars in thousands)

 

Pass

 

 

Special

Mention

 

 

Substandard

 

 

Total

 

CRE

 

$

69,252

 

 

$

2,701

 

 

$

104

 

 

$

72,057

 

MF

 

 

8,998

 

 

 

—

 

 

 

—

 

 

 

8,998

 

C+I

 

 

26,823

 

 

 

—

 

 

 

28

 

 

 

26,851

 

ADL

 

 

21,365

 

 

 

—

 

 

 

—

 

 

 

21,365

 

RES

 

 

233,477

 

 

 

—

 

 

 

722

 

 

 

234,199

 

HELOC

 

 

6,832

 

 

 

—

 

 

 

115

 

 

 

6,947

 

CON

 

 

4,574

 

 

 

—

 

 

 

—

 

 

 

4,574

 

Total

 

$

371,321

 

 

$

2,701

 

 

$

969

 

 

$

374,991

 

 

Certain directors and executive officers of the Company and companies in which they have significant ownership interests were customers of the Bank. Loans outstanding to these persons and entities at March 31, 2022 and December 31, 2021 were $4.7 million and $4.8 million, respectively.